The Retail Industry and Regionalization
:
The strategic drivers of CSR and regionalization in the retail
industry.
Master Thesis
MSc. Business Studies – International Management Supervisor: Dr. Johan Lindeque
Second reader: Dr. Arno Kourula
Student: Poya Kabiri
Student ID: 10516131
Date: 2014-01-31
field of Corporate Social Responsibility (CSR) with regards to the characteristics of the retail industry. The aim is to expand the debate about regionalization to this specific type of capability that has continuously gained more influence on the business arena. The paper investigates six of the largest retail firms in North America and Europe, representing five different home countries and two major regions. By using a multiple-case approach, data from the firms’ annual reports and sustainability reports have been collected for the years between 2008 and 2012, which is also supplemented by secondary sources in terms of news articles. The study shows that the firms’ CSR efforts are differently constructed and implemented with regards to the institutional context, asset specificity, upstream or downstream emphasis and the utilization of brand strengthening capabilities. The contrasting picture between the North American and European firms’ suggests that contextual differences carry a large role in shaping the corporate social responsibilities of the firms. The study also shows how the CSR is perceived and prioritized differently among the firms, resulting in differently developed CSR capabilities that have different degree of inter-regional reach. The findings also suggests that the transferability of CSR inter-regionally as a firm-specific advantage is not univocally regarded as equally advantageous, which implies that CSR as a concept is not definitive.
I would like to thank my supervisor Johan Lindeque for all the invaluable comments and discussions in the process of writing this thesis. In times of doubt Johan was not only able to push me in the right direction concerning the modelling of the thesis, but he was also able to invigorate me confidence and motivation. All students should have supervisor with your level dedication and lust for teaching. Further more, I would like to thank all my new friends here in Amsterdam. All the great experiences we have shared this year has left a long and lasting impression on my last year as a student. And lastly, I would like to give my thanks to my beloved parents and Anna for always being there for me during this long journey that has now come to and end. I am grateful for having you all putting up with me through all the ups and downs a long the way. Poya Kabiri Amsterdam, January 2014
1. Introduction ... 1
2. Literature review ... 4
2.1 Regionalization ... 4
2.1.1 A Global World ... 4
2.1.2 A Regionalized World ... 5
2.1.3 Main Themes in Regionalization Literature ... 7
2.1.3.1 Asset and Industry Specificity ... 7
2.1.3.2 Intra- and Inter-regional Liability of Foreignness ... 8
2.1.3.3 Home Region- and Home-Country effect and Firm Specific Advantages ... 10
2.2 Institutional-Based-View ... 11
2.3 Resource-Based View ... 13
2.3.1 Resources and Capabilities ... 13
2.4 Corporate Social Responsibility ... 15
2.4.2 CSR and Corporate Performance ... 16
2.4.3 CSR and Regionalization ... 17
3. Methodology ... 23
3.1 Research Philosophy ... 23
3.2 Multiple-Case Study ... 23
3.3 Focal Sector and Case Selection ... 24
3.4 Data Collection ... 25 3.5 Analytical Approach ... 26 4. Results ... 27 4.2 Within-Case Analysis ... 28 4.2.1 Royal Ahold ... 28 4.1.3 Metro AG ... 32 4.14 Tesco ... 35 4.1.5 Kroger ... 38 4.1.6 Target ... 41 4.1.7 Walmart ... 44 4.2 Cross-case Analysis ... 47
5. Discussion and Conclusion ... 52
5.1 Limitations ... 53
5.2 Future Research ... 54
Index of Tables
Table 1. Levels of Regionalization……….6
Table 2. Royal Ahold: Regional orientation by sales, assets and employee orientation and CSR profile by the regional orientation……….28
Table 3. Metro AG: Regional orientation by sales, assets and employee orientation and CSR profile by the regional orientation……….32
Table 4. Tesco: Regional orientation by sales, assets and employee orientation and CSR profile by the regional orientation………...35
Table 5. Kroger: Regional orientation by sales, assets and employee orientation and CSR profile by the regional orientation………...38
Table 6. Target: Regional orientation by sales, assets and employee orientation and CSR profile by the regional orientation………...41
Table 7. Walmart: Regional orientation by store allocation and CSR profile by the regional orientation………..44
Table 8. CSR and regionalization of
retailers……….………...47
1. Introduction
In this new era of time most of us are under the impression that the world is coming closer together and becoming more globalized. New technology has enabled more effective ways to communicate, trade and travel between countries’ and continents. However, the idea of a highly integrated world with global firms’ is not true, but it has been exaggerated. According to the works of Alan Rugman (2001) the concept of globalization is overstated and incorrect. It is suggested that globalization in the terms of a single market does not exist, has not existed previously and most probably will not exist in the future either. Further on, it is proposed that certain blocks of regions, such as North America, the European Union and Japan/Asia, attract the majority of business to operate within their own specific region (Rugman, 2001; Rugman, 2005). Hence, the majority of multinational enterprises’ (MNEs) strategies are not global, but restricted to the own region, which is confirmed by the seminal work of Rugman and Verbeke (2004). Their research shows that an overwhelming majority of the Fortune 500 firms, 320 out of 380 firms, which had geographical sales available, are home-region oriented. This means that 84 per cent of the fortune 500 firms have at least 50% of their sales within their home triad.
The study of the regional nature of MNEs has previously been expanded to covering specific industries (Rugman and Collison, 2004; Rugman and Girod, 2003; Filippaios and Rama, 2008) and underlying causes as to why so many firms are home-region oriented (Rugman, 2005), why some are not and if firms should strive for a global strategy or a regional one (Cuervo-Cazurra et al, 2007; Ghemawat, 2001; 2003; 2005). As globalization has caught a lot of attention the responsibilities and accountability of corporations, especially MNEs, has come under scrutiny. The corporate social responsibility (CSR) has come to become an important aspect of many firms’ business model. While there are sceptical views on the benefits of corporations taking social and environmental responsibility (Devinney, 2009; Friedman, 1970) there is an overwhelming majority of research showing positive outcomes from CSR (Ambec and Lanoie, 2008; King and Lenox, 2002; Kourula and Halme 2008; Porter and Van der Linde, 1995; Porter and Kramer, 2006; Sharma, 2000). This has made CSR to become a more prioritized research field and also brought it closer to the field of regionalization. By examining the CSR initiatives of firms it is possible to find differences and similarities between specific sectors and
regions that can be applied as a new approach to view regionalization. CSR can be used as an instrument to assess regionalization and confirm as well as shine a new light on this specific field of research within international business.
The retail industry is one of the largest sectors included in the Fortune 500 list and is represented by large firms that mainly origin from Europe and North American. They are among the largest employers in the world and large importers of goods from all around the globe. They are, however, also among the most home region oriented industries in the world (Rugman and Girod, 2003). This raises the question about the impact CSR can have on the development of firm-specific advantages (FSAs) that are associated to CSR. This paper attempts to investigate the regional orientation of the retail industry from a CSR angle by examining the site and industry specificity of the sector, the institutional environment and the specific type of CSR activities that is being promoted. Six of the major retail firms in North America and Europe (Walmart, Target, Kroger, Royal Ahold, Metro AG, Tesco), which are all active running department stores, hypermarkets and warehouse clubs, will be explored. They are all among the largest retailers in the world and represent four different home countries (USA, Netherlands, Germany, UK). What is interesting about retailers within the department store, hypermarket and warehouse club segment is the fact that the products sold are often generic. Thus, the retail sector cannot only rely on selling a product, but they also need to sell a brand. One major brand strengthening effort is a strong a CSR, which influences the perception and valuation of the brand by the customers, suppliers, the labour market, capital market and the media (Girod and Michael, 2003). Besides the importance of branding to the retail sector, and thereby also CSR, the influence the retail sector has on suppliers and consumers is immense. The large product range of retailers influences the allocation of production facilities around the world. Retailers source a lot of their products from developing and emerging countries and their choice of production sites carry a lot of significance and consequences for entire communities. The massive marketing campaigns towards customers are also argued to be a powerful instrument to influence the buying behaviour of consumers and thereby retailers also carry partial responsibility for shaping what we are consuming (Jones et al, 2005). Consequently, all these aspects contribute to making CSR and the retail industry in particular an interesting field to study.
The paper will begin by reviewing the regionalization literature, the basics of the Institutional-Based and Resource-Based View and Corporate Social Responsibility from a regionalization perspective. This is then followed by a method section that explains the data collection and the level of analysis, presentation of the results and a discussion and conclusion section where the findings of the paper are discussed.
2. Literature review
2.1 Regionalization 2.1.1 A Global World
The concept of globalization is a cornerstone in the study of international business (IB) as it generally describes the increased integration of countries and people, as well as views and cultures (Peng, 2012). It is stated by Levitt (1983) that the convergence of people’s demands and the creation of a more unified and accessible world market, where regional differences are becoming blurred, is a result of globalization. The concept of regionalization clinches with the view that the world is moving towards a more globalized world with the largest multinational enterprises (MNEs) being more or less present in all over the world. The academic literature on the theories of regionalization mainly derives from the research conducted by Rugman and Verbeke (2004) and Ghemawat (2003). Rugman and Verbeke (2004) argue that the majority of large MNEs have up to 80 per cent of their total sales within their home-region triad. Previous research has touched the subject earlier with the study of the extent of international operations by Hymer (1960). Hymer’s (1960) research found that the form of expansion that occurred in-between countries was dependent on earlier patterns of trade, which was also negatively correlated. He further found that in certain industries the advantages against other firms promoted the more capable firms to expand abroad. The idea was based on the notion that entrepreneurship was not rooted in specific countries, but developed widely across different countries when the number of firms is too low. It was suggested that there might be tendencies of market sharing where the national firms divide the market amongst each other to accommodate there own national sphere where they have the most influence. When pointing out the reasons behind why firms do not operate internationally, Hymer (1960) assumed that it had to do with he absence of integration in the world economy, something that have changed dramatically since the publishing of the report. But as the interdependence between countries has risen with the increased flow of capital, commodities, goods, products, services and human resources, a fully integrated market has not yet been achieved (Rugman and Verbeke, 2005). According to Rugman and Verbeke (2005) the more regional type of clusters we see are results of
efforts by a compound of economic actors that wishes to expand to more proximate geographical opportunities to create agglomerating economies without having to pay high transaction cost. Thus, the regional integration is not driven by a top-down demand for a more consolidated market, but rather a bottom-up effort that seeks to align the transactions between firms and countries.
2.1.2 A Regionalized World
The concept of regionalization, in its essence, is derived from the notion that business operations across, more or less, heterogeneous groups of countries comes with higher costs than business conducted within homogenous groups. Essentially, the disadvantages faced by foreign firms competing against home region firms skews the costs for the parties and thereby discriminates against the outsiders trying to penetrate the home market (Asmussen, 2008). The term used to describe the variable that affects foreign firms is known as the “liability of foreignness” (LoF). The term has its origin in Zaheer’s (1995) empirical study on the performance differences between local and foreign firms in competition within the same globally integrated market. The LoF is derived from additional costs incurred from the spatial distance, the costs of unfamiliarity with the foreign market and the absence of legitimacy in the local environment (Zaheer, 1995). These sets of limitations for foreign firms can be closely linked to the policy-driven integration of the three main economical regions in the world today: the North American Free Trade Agreement (NAFTA), European Union (EU) and Association of Southeast Asian Nations (ASEAN). The three regions could be seen as continuously pushing for regulations and polices to further enhance and entrench the sources of inter-regional LoF by allowing more alignment of the political, economical and cultural conditions. The use of segmentation between geographical spaces was anchored by the research of Ohmae (1985). A division of regions was created based on the coherence of regions with low macroeconomic growth, a comparable technological structure, being large regions, capital- and knowledge-intensive, having firms in most sector’s and a relative homogenization of demand and protectionist pressures. The dividing of regions with these sets of aspects in mind lead to the triad segmentation, which was the regional clusters Rugman and Verbeke (2004) used as a foundation for their seminal research on regionalization. The triad segmentation originally indicated that the core and concentration of the world’s largest MNEs in the world was allocated to the USA, Europe and Japan
(Rugman, 2000, Rugman and Verbeke, 2004). This paper will use an extended distinction of NAFTA, Asia and the EU as adopted by Rugman and Verbeke (2004). In the light of the triad-segmentation and the evident difficulties with confronting the LoF it is clear from the regionalization theory of Rugman and Verkebe (2008) that MNEs have difficulties with deploying their firm-specific advantages (FSAs) outside their home region. Their incapability to use the FSAs and exploit them, location-bound as well non-location location-bound, is due to the restricted transferability and acceptability of firms FSAs in foreign markets. On the other hand, intra-regional expansion seems to be possible to achieve at a lower cost than inter-regional expansion (Rugman and Verbeke, 2007).
Further on, the foundation of the framework of Rugman and Verbeke’s (2004) regionalization theory is based on the relative amount of sales in the home region and the other regions, compared to the total amount of sales. The different degree of regionalization is then defined by four sets of limitations with regards to the geographic dispersion between the triad regions. The degree of regionalization is defined by four sets of categories. Home region oriented firms that have at least 50 per cent of their sales within the home region, Bi-regional oriented firms, requiring least 20 per cent of the sales in each of two regions, but with less than 50 per cent in any other region, host region oriented firms, have at least 50 per cent of their sales in a region other than their own while the last one, Global oriented firms, is characterized by firms that does not exceed 50 per cent in sales within the home region, but have at least 20 per cent of the sale in all regions.
Table 1. Levels of Regionalization
Home Region Second Region Third Region Home Region Oriented MNEs 50% +
Bi-Regional MNEs 20% < X < 50% 20% < X < 50%
Host Region Oriented MNEs X < 50% 50% +
Global MNEs 20% + 20% + 20% + Source: Rugman and Verbeke (2004)
2.1.3 Main Themes in Regionalization Literature 2.1.3.1 Asset and Industry Specificity
As a central view in the study of economics the Transaction Cost Economics (TCE) concept (Williamson, 1979) describes how the exchange between buyers and sellers is subjected to transaction costs. Actual costs are increased due to transaction costs as they are subjected to opportunism, which creates distrust between parties bounded by contract as incentives can occur that makes it less probable to follow a contract. This imperfection of trust and information in-between parties’ creates a potential problem regarding the “Asset Specificity”. Asset Specificity is argued to be the main factor behind cost difference between transactions (Riordan and Williamson, 1985). A more specific asset is required depending on the type of asset that is needed. Williamson (1983) treats the asset specificity according to four different forms: site specificity to economize on the close proximity to a certain resource, physical asset specificity such as special machinery that has a limited purpose, human assets specificity that comes from highly skilled human capital that leads by-doing, and dedicated assets that can be plants that are dedicated for a specific use. Specialization can increases the productivity of the resource, but it simultaneously decreases the alternative value and thereby also the reach and scope of asset. Thus, strong asset specificity limits a widespread deployability of assets and results in assets that serve single functions or within specific locations, which inherently makes the asset more immobile (Dyer, 1996). Given that the regionalization theory is viewed through the TCE lens, firm-specific advantages and country-firm-specific advantages (CSAs) deployed in host regions are argued to require asset specific investments (Rugman, 2005). Host regions require investments that integrate the FSAs and CSAs according to the cultural, administrative, geographical and economical norms.
In addition to the asset specificity, “Industry Specificity” (Kolk, 2010, pp. 56) is also and important aspect of the regionalization theory. Industry specificity can be seen from a broader view, such as the segmentation between service and manufacturing industries, or more narrowly segmented like the retail, cosmetic, accounting, banking and automotive industry. In the regionalization literature some industries have been more scrutinized then others regarding their internationalization strategies. The food and beverage industry has been found to be pursuing a regional strategy (Filippaios and Rama, 2008) and so has the retail industry (Rugman and
Girod, 2003). The cosmetics industry shows the same tendencies as the sales and assets, (downstream and upstream activities) are oriented in the home region (Oh and Rugman, 2006). The same can be said about the automotive sector as it is segmented into manufacturers that mainly dominate within their own region without significant sales in other ones (Rugman and Collison, 2004). This does not come as a surprise as the majority of firms are argued to be regional (Rugman and Verbeke, 2004), but it does show some disparities between different sectors. Hence, industry specificity contributes with an additional perspective to how different factors affect the process of geographic expansion, which has been exemplified by Ghemawat’s (2001) study on how spatial distance affects different industries asymmetrically.
2.1.3.2 Intra- and Inter-regional Liability of Foreignness
Further on, the regionalization concept argues that the majority of MNEs operate within their home regions and to a smaller extent outside those regions (Rugman and Verbeke, 2004; Rugman, 2005; Ghemawat, 2001, 2003). International expansion aims to increase firm performance from economies of scale and scope, further market power, arbitrage opportunities and enhancing the firm’s knowledge base and competitiveness (Contractor et al, 2003; Lu and Beamish, 2004; Delios and Henisz, 2000). As the expansion is mainly profit driven the degree of global expansion is surprisingly low. Investments are made to leverage the unique capabilities of the firms’ but they face constraints that give rise to liability of foreignness (LoF) (Zaheer, 1995). The LoF according to Zaheer (1995) stems from four different sources: It is costs related to the geographical distance that stems from travel and transportation expenses and the complex coordination of conducting business over distance and across time zones, costs that arise from the firm’s inexperience to operate within the new environment, costs related to the specific host country such as lack of legitimacy of foreign firms, cultural-, administrative-, economical- and nationalistic-barriers and, lastly, costs related to legislation and regulation imposed by the home country restricting sales of some types of goods or specific technology. The regionalization literature has developed the concepts of and inter-regional LoF. Where intra-regional LoF refers to liabilities within the same region, whereas inter-intra-regional LoF can be defined as liabilities between different regions. Expanding to foreign regions without taking into account the liabilities ahead could potentially lead to weak access to crucial resources, difficulties with deploying FSAs and thus a great disadvantage
against the local competition (Dunning, 1979). However, increased performance and profit is not only determined by the degree of internationalization but also the pattern of internationalization (Goerzen and Beamish, 2003), such as the different effects of intra- and inter-regionalization. Rugman and Verbeke (2007) points out that LoF is less apparent as a liability for firms that expand intra-regionally. This is related to the more homogenous environment within the home region as the spatial distance, culture and language is more analogous to the home country. From an institutional perspective (Whitley, 1992) suggests that inherent legal and political institutions in the US, European and Asian societies affect the business systems and thus strengthens the contrasts. This is further strengthened by the increasing intra-regional integration of the regions via NAFTA, the EU and ASEAN. According to Kudina (2012) this significantly increases the inter-regional LoF but in opposite reduces the LoF for firms expanding intra-regionally. The EU is a good example where barriers in-between the EU-members is slowly diminishing to merely language and culture as economical and administrative barriers has been mainly mitigated. This view aligns with the research of Rugman and Verbeke (2007) that argues that LoF increases considerably as firms venture into inter-regional expansion. Location-bound FSAs can often be optimized to be deployable and exploitable in the entire home region and non-location bound FSAs can also potentially be tuned to be utilized as well. On the other, hand inter-regional expansion hampers such modification of FSAs. The ability to develop complementary resources that can overcome large inter-regional transaction costs, such as location-bound brand names and other types of branding capabilities, is recognized to improve the deployability and exploitability of the firms’ resources. However, as the spatial, cultural and economical distance increases, the performance, compared to an intra-regional expansion, decreases (Ghemawat, 2001; 2005). Rugman and Verbeke (2004; 2007) also argue that high levels of inter-regional LoF impact the downstream and upstream parts of the value chain differently. FSAs that stem from the downstream part of the value chain are subjected more unsurpassable LoF if the aim is inter-regional market seeking. FSAs from the upstream parts of the value chain are on the other hand not as sensitive to the inter-regional LoF since missions, such as manufacturing or sourcing, often has a shared mutual interest from other economical actors and stakeholders that help to mitigate certain aspects of the LoF.
2.1.3.3 Home Region- and Home-Country effect and Firm Specific Advantages
The home region effect can be viewed from the perspective of Williamson’s (2000) transaction cost economics (TCE) theory. By addressing the issues of the geographic scope of internationalization, the local responsiveness and structure of foreign subsidiaries, the TCE investigates how contractual hazards can be avoided from bounded rationality, a term which describes the non-rationality of individuals decision making that is dependent by the availability of information and thus limited in formulating and solving issues. Rugman and Verbeke (2005) argues that bounded rationality and bounded reliability, were bounded reliability refers to how presumed outcomes does not result in promised outcomes (Verbeke and Greidanus, 2009), obstructs globalization. The bounded rationality and bounded reliability contributes to raising the costs for firms’ internationalization process to become too high, as there is an excessive focus on location bound FSAs. Rugman Verbeke (2005) further argues that the confidence in country-specific advantages (CSAs) have been inflated, as the majority of the world’s largest MNEs conduct business within their own triad region (Rugman and Verbeke, 2004). Conversely, the home region effect is justified by the ability to deploy FSAs that are not limited to the home region and location bound, but rather non-location bound. FSAs that are coordinated together with the CSAs create non-location bound FSAs that are utilizable in foreign markets by becoming more locally responsive through investments in complementary resources and new FSAs, developed explicitly for the foreign market (Rugman and Verbeke, 2004; Cuervo-Cazurra et al, 2007). As to striving for global expansion in new, untapped markets, it is not necessarily more profitable than expansion within the more familiar home region. According to Ghemawat (2001) non-location bound FSAs often have potential to be applicable within the home region as well, with minor adjusting investments. On the same note, location-bound FSAs can also be modified to be deployable for the entire region. This further underlines the efficiency of applying an intra-regional strategy versus an inter-regional one. Global strategies are related to higher costs of bureaucracy and management and appear to result in weaker financial performance compared to firms that have a home-triad based strategy (Li, 2005).
The impact of the home country has in the debate about regionalization also been found to be important and influential. Regionalization for the majority of large MNEs can be derived from a strong home-country effect, which is influenced by too small incentives to expand to foreign markets. Sales, assets, and other sets of
variables show how strategies have a propensity to become domestic (Asmussen, 2008; Collinson and Rugman, 2008; Seno-Alday, 2009. Further on, the pattern of internationalization is also related to the home country effect. According to Kogut and Singh (1988) the MNEs today are the cross-cultural brokers of world trade, but still highly influenced by the dominant home country culture. Due to variables such as cultural distance between countries’ (Hofstede, 1983) some methods of internationalization are proven to be more suitable that others. The implications are relevant as firms’ that may be culturally robust are inherently lead by managers that are strongly characterized and formed by their identification with the home country. This latent bias towards the home country implies that the home country effect is evident and highly influential. By adhering to the home country bias firms’ find it more profitable to establish a practice intra-regionally.
2.2 Institutional-Based-View
Whether a MNE is a successful or not is a result of the firm’s ability to make use of its FSAs within the boundaries set by the conditions of the specific industry. But using this narrow and simplistic view, the formal and informal institutions are disregarded and the bigger picture and context surrounding the firm gets lost (Barney, 1991; Peng et al, 2008). Although institutions themselves are made out of various elements they also vary amongst each other. The approach of this paper is to include both North’s (1991) economic view and DiMaggio and Powell’s (1983) sociological interpretation of institutions. The pivotal research by North (1991) defines institutions as humanly devised constraints that are separated into formal and informal institutions. Institutions, in North’s (1991) view, create order and reduce uncertainty that has helped to decrease transaction costs and lead to the origination of economies of scale. Williamson’s (2000) New Institutional Economics (NIE) model further illustrates the levels of institutions and how they affect the contextual perspectives. The NIE suggest that the different levels of institutions are continuously changing and evolving. The institutions either evolves incrementally, such as cultural and cognitive norms or rules of the game, or rather at a continuous or fast pace, like governance or resource allocation. The views of North (1991) and Williamson (2000) provide a broad understanding of the basic concept of the Institutional-Based-View (IBV). It makes it understandable to see why MNEs suffer from trying to penetrate markets where the institutional settings are remarkably different from the home region. The
instruments supporting and strengthening the formal and informal institutions of a region or country are constantly creating and enhancing a setting that increases the boundaries against foreign firms.
Cantwell et al (2010) accepts the findings of Rugman and Verbeke (2004) and asserts that institutional challenges, formal and informal, are associated with higher transaction costs but cannot be countered by implementing old strategies. It is suggested that MNEs have to be more experimental to overcome the uncertainties with external environments by experimenting with new types of institutional innovations. Therefore, MNEs need to create decentralized governance structures that are both locally responsive as well as internationally interconnected. It is vital, according to Cantwell et al (2010), to regenerate institutions and especially by the MNEs themselves, as they act as catalysts.
Kogut and Singh’s (1988) study on the effect of national cultures on entry modes exemplifies the significance of informal institutions and how they shape different organizational practices and expectations. The study strengthens the underlying reasons behind the theory of regionalization by reinforcing the fact that business across different types of cultures bring about more uncertainty and thus higher costs. The disadvantages met by conducting business with culturally distant countries are according to the investigation countered by managers’ trough entry modes that involves less exposure to the cultural difference. Although MNEs are agents of cross-cultural trading and act as instruments to blur country and cultural specific boundaries they are still remarkably influenced by the dominant home country culture, as was mentioned above, which is consistent with the findings of Rugman and Verbeke (2004). The institutional factors affecting entry mode decision are to a large extent driven by isomorphism. DiMaggio & Powell (1983, p. 149) describe isomorphism as a process that forces one unit in a population to mirror other units that face a similar set of environmental context. Business units have the option to give in to internal or external pressure from either the parent firm’s intrinsic institutional norms or the host country cultural context. But businesses have a tendency to be more influenced by the internal isomorphism processes and therefore more sensitive to rigid and heavy host country specific norms, which can be exemplified by the inability of many MNEs to establish in country’s that show too much resistance to the parents company’s inflexible and conformed norms (Davis et al, 2000). However, firms that gain experience from operating in different
environments has shown to be more successful in entering new markets as well by being able to generate generic knowledge on internationalization (Hall, 1993). Concurrently, the capability to internationalize effectively is increasingly more dependent on the ability to transfer softs assets. Soft assets are vulnerable and difficult to deploy in unfamiliar contexts, as they are embedded in the country specific institutional profile and therefore more improbable to transfer successfully (Brannen, 2004).
2.3 Resource-Based View
2.3.1 Resources and Capabilities
As the IBV helps to explain the externalities that affect firms operating in host countries’ the resource-based view (RBV) looks closer into the internal resources and capabilities of firms. According to the RBV successful firms that manages to overcome disparate institutional frameworks (Cantwell et al, 2010) and the challenges of LoF (Zaheer 1995) have been able to develop and deploy firm resources that can be converted into a competitive advantages. The research of Wernerfelt (1984) and Barney (1991) investigates firms in terms of their resources and the products. The view shines light on the importance of strategic decision-making and value of the tangible as well as intangible assets. Barney (1991, p. 101) defines the firms resources as “ all assets, capabilities, organizational processes, firm attributes, information, knowledge…” that allows them to create and implement its strategies. To develop a source of sustained competitive advantage the firm’s resources have to fulfil four different criteria. The resource need to be valuable, rare, imperfectly imitable and lastly there cannot exist an equivalent strategic resource that is valuable, but neither rare or imperfectly imitable (Barney 1991). In a somewhat diametrical difference from the IBV, the RBV points out the firm endowments and how they are exploited as the most relevant factor to a firm’s success or failure. The potential to succeed as a firm is dependent on the merits of the firm’s resources and whether they are used effectively. For a firm to be able to internationalize successfully, the resources have to be capable to be transferable to another country. However, the link between a competitive advantage in the home country and abroad is not always clear. According to Hu (1995) advantage is relative and the drivers vary between different regions as the context differs. For an example, being ahead of domestic competitors
does not always equate to being ahead of foreign ones, and vice versa, some advantages can be more fruitful outside the domestic market than within. Further, certain advantages are tacit and thereby embodied by the firms’ and therefore inherently more complex to transfer. And in addition to that, the transferability of some advantages may require complementary assets to lubricate the transition (Eriksson et al, 1997).
These issues with internationalization can be separated into three main issues, namely: (a) difficulties with loss of advantage when operating in a new country, (b) the creation of further disadvantages and (c) shortage of auxiliary investments to smoothen the transfer of advantages (Cuervo-Cazurra et al, 2007).
(a). Entering new countries’ often expose firms to unfamiliar environments (Ghemawat, 2001; Kogut and Singh, 1988; Peng et al, 2008; Zaheer, 1995). The encounter with new customs across countries can lead to a loss of advantages during the transfer. This does not affect, and is not anticipated, by all firms as the main reason for entry in a new country is often driven by the absence of strong local competition. In an effort to overcome the non-transferability, of either firm-specific or industry-specific advantages, the firm can attempt to develop new resources that overcome the foreignness by being more locally responsive or setting up independent subsidiaries (Bartlett and Ghoshal, 1986). An additional alternative to overcome the non-transferability is to internationalize incrementally. By optioning for a model that focuses on gradual acquisition and international expansion by firstly committing to export, high-risk affairs can be averted to a larger extent (Johanson and Vahlne, 1977). In more unusual instances firms are completely unable to transfer their advantages and have no ability to create value. This is caused by several problems met by the firm, such as the spatial distance, cultural norms and other country characteristic, but is mainly a result of weak planning and an overestimation of the potentially gained value.
(b). Resources can also be counter productive and more harm than benefit. As firms transfer advantages that are embedded in the routines of the firm they can in the wrong context be conflicting instead of compatible (Hastings, 1999). A great number of transferred resources expose the firm to greater risk. Thus, a more gradual and careful process of international expansion, as mentioned above, is related to a lower risk of creating disadvantageous resources (Johanson and Vahlne, 1977). The source of the generated disadvantage is associated to either the foreign country’s formal
institutions or the informal ones. Firms are discriminated by the host country’s government due to perceived threats of the domestic market, or, political security reasons. However, the risk is of less significance when the relation in-between the home and host country is stable (Cuervo-Cazurra et al, 2007; Zaheer 1995). Discrimination and disadvantages are also originated form aversion against the nationality of the home country. It is based on nationalistic views and prejudice, which affects the perception of the quality of products and services negatively leading to weaker results (Peterson and Jolibert, 1995).
(c). As FSAs are deployed during internationalization, support can be required through complementary resources. It can be necessary to adapt the resources to the new environment and therefore develop measures that lubricate the transition. Firms suffering issues with expansion, new environments, discrimination and weak infrastructure are required to adjust their resources and complement them. In the absence of a flexible strategy that accompanies the FSAs the firm might not be able to exploit the most out of its resources (Levitt, 1983; Rugman and Verbeke, 1992; Zaheer, 1995).
By addressing the issues with internationalization and how FSAs varies and loses properties in new and different environments it becomes further apparent why large MNEs face difficulties with expanding to other regions (Rugman and Verbeke 2004). FSAs that have been have sharpened by the firms within the home country, or home region, to penetrate accurately are exposed to numerous obstacles that prevents them from functioning as expected. The resources and capabilities of MNEs cannot to a broad extent outweigh the barriers of foreign boundaries, which is in line with the seminal work of Rugman and Verbeke (2004) on how the largest MNEs lack global presence.
2.4 Corporate Social Responsibility
In today’s business climate it is more or less standard for MNEs to take a corporate social responsibility (CSR). The meaning of the term CSR is widely debated with regards to who the actor is, what scope and content of the responsibility is and the motives and drivers for corporate responsibility (Porter and Kramer, 2006). The critic against CSR is based on the notion that corporations exist to only generate economic return and that the trade-offs to take a voluntary social responsibility are too large. The view is that the raison d'être of corporations becomes skewed, as they are only
supposed to see to their own needs and not the society’s since they are not suitable representatives to decide how capital should aid the society or be allocated. Thus, corporations should not be actors that drive social responsibility (Devinney, 2009; Friedman, 1970). However, CSR mainly have more advocates than opponents, but the definition is more contested. The European Commission’s Green paper on promoting a European framework for CSR (Commission, 2001, p. 6) states that CSR is “a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis”. The most dominant approach on CSR is based in the triple bottom line (TBL), developed by John Elkington (1997). According to Elkington (1997) the TBL connects three separate pillars: environmental, social and economical, also known as planet, people, profit. The first pillar, the environment, highlights the environmental footprint that corporations leave behind. It is concerns local, national, regional as well international impact and it relates to air, water, land and biodiversity aspects. The second pillar, the social dimension, explains sustainability from the perspective of how business affect society. It embodies how stakeholders such as employees, customers, the local communities and the entire supply chain are impacted by corporate activities. The last pillar, the economical aspect, concern corporations responsibility regarding honest financial disclosure. It captures how the economical profits also should benefit the society and community fairly (Marcus and Fremeth, 2009). The objective of CSR and the TBL can summarized by the words of the Brundtland Commision (United Nations, 1987) when they defined sustainable development as “meeting the needs of the present without compromising the ability of future generations to meet their needs”. To be able to reach the goal of sustainable development with the support of corporations through CSR, the TBL pillars need to work in harmony with each other and the monetary goals of the firms’.
2.4.2 CSR and Corporate Performance
The conflicting interests are many, as was mentioned above, but scholars are increasingly investigating the growing relevance of CSR to the firm value and performance. The influential work of Porter and Van der Linde (1995) argues that wasteful management of resources is cost ineffective. By complying to stricter waste polices costs can be reduced, but it cam also increase the capability to breed resourcefulness and innovation as the firm focuses on creating more efficient and
effective solutions, which leads to better financial performance. As a driver regulations are opted as a key factor to create pressure and demand improvement. Similar results have been seen in the study of the Sharma (2000) on oil companies, King and Lenox (2002) regarding profitable pollution reduction in general and Ambec and Lanoie’s (2008) systematic overview on whether being green is profitable. As the concept of CSR and its fruits have become more widely recognized the strategies to become successfully sustainable has flourished. Whereas many firms still view CSR as a burden that mainly could increase the corporate goodwill, the emergence of strategic and innovative CSR has surfaced (Porter and Kramer, 2006). Newly emerged types of CSR insist that the relationship between the society and corporations is reciprocal. It is emphasized how important a win-win situation is between corporations and society and how it can to result in a shared value through an innovative driven business model. CSR activities need to be linked to how the corporation activities affect the internal value chain and how it influences the context it exist in. Societal and environmental issues should be seen as sources of innovation to develop new resources and capabilities. If this perspective is targeted and applied it easier to strategically perform sustainable. The most significant impact a firm can do for its own best is to leverage the firm-specific capabilities that can benefit the firm and the society in the long term (Kourula and Halme 2008; Porter and Kramer, 2006). They key, according to Porter and Kramer (2006), is to take into account the competitive context and the social dimensions and thereby develop strategic CSR. Ambec and Lanoi’s (2008) further explain how firms can capitalize from CSR by either increasing revenues through new and better streams of income or by exploiting cost reducing opportunities. Revenues can be increased by taking a greater environmental responsibility that can lead to opportunities where it is easier to gain access to certain markets, exploit niches of certain customer and the become a first mover regarding specific technology. Costs can be reduced via risk management, lower credit costs, lower labour costs and less waste of energy, material and other services.
2.4.3 CSR and Regionalization
It is crucial to understand the more important role CSR has to businesses and the study of international business, but also the many specific factors that affect and shape firms’ CSR. As the perception of the scope of MNEs and their environmental
and social responsibilities has increased they are more frequently confronted with suggestions on how they can redeem themselves. Thus, as CSR has gained momentum, research (Porter and Van der Linde, 1995; Porter and Kramer, 2006; Kourula and Halme 2008; Sharma, 2000; King and Lenox, 2002; Ambec and Lanoie’s 2008) shows that firms can exploit this shift of corporate responsibility to help them innovate new FSAs. This has brought the discussion about CSR closer to the field of international business (Kolk and van Tulder, 2010). The interlinkage between the RBV and CSR is illustrated by the natural resource based view (NRBV) that examines how the resources and capabilities of firms’ works in symbiosis with CSR agendas that can help to develop synergy effects that lead to competitive advantages (Hart, 1995). This modified view of the RBV is parallel to the views presented above that recognized the rewards of successfully implemented CSR efforts.
In the discussion about CSR it is also important to recognize all the different factors affecting the adoption it. According to Kolk and Pinkse (2011), firms trying to apply strategic CSR have to take into account several factors that influence the level of commitment and change. There are issue-specific factors to consider, as firms can have issues with the complexity of CSR, the scope of it and existing institutional framework. Firms also need to reflect on sector-specific factors as the sectorial context determines the extent of the specific commitment, the alternatives, the lobbying power of the industry, the technological level and growth level. Regarding the firm-specific factors, numerous perspectives need to be recognized. It is, for instance, important to look closely at the position the firm has within the value chain and the nature of it. Further on, the market positioning, financial situation, earlier involvement in similar investments, corporate culture and executive attitude toward change needs to be acknowledged. Lastly, the country-specific factors are essential as it defines the national view on CSR-issues and controls existing political framework, the promotion of industrial policies and the resource endowment limitations (Kolk and Pinkse, 2011, p. 15).
As CSR is recognized as performance enhancing it is plausible to also see it as an advantage that is country or/and firm specific, depending on the factors established by Kolk and Pinkse (2011). The CSAs and FSAs, elements developed by Rugman and Verbeke (1992), model the strategies of firms through the lens of TCE. Considering CSR as a resource that is capable of developing FSAs and CSAs, firms could, by
harnessing the advantages of CSR, shift their level of global penetration. FSAs are built on the ability to internalize firm assets (Rugman, 2005) and CSR strategies based on these assets could then create location or non-location bound FSAs than can either increase the geographic reach or decrease it. The level of CSR of a firm can also be rooted in country-specific endowments, proposed by Michael Porters’s diamond model (1990), and consequently limit the extent of the reach of the firm’s capability (Rugman 2005). Thus, by applying the regionalization theory of Rugman and Verbeke (2004) it can be investigated how CSR from a CSA perspective can influence the capabilities of MNEs and their globalization/regionalization approach.
CSR and its utilization as an FSA is, as mentioned above, constrained by country specific factors, just like any other type of capability. The LoF (Zaheer, 1995) prevents assets and capabilities from behaving identically to the home country within the host country. The informal institutions (Kogut and Singh, 1988) that shape the national cultures and organizational practice and expectations characterize the acceptance level of new and foreign firms. According to Rugman and Verkebe (2004) MNEs function as agents of cross-cultural trading and influence each other. However, several factors increase the wedge between how CSR is perceived and utilized in North America and Europe. Firstly, the societal views in how corporations should be viewed in general, whether they are strictly generators of income (Devinney, 2009; Friedman, 1970) or shared value creators (Kourula and Halme 2008; Porter and Kramer, 2006) set the broad agenda and priority of the different corporate societies, especially regarding CSR. The fundamental opinion on climate change and the triple bottom line is not homogenous between North America and Europe and thereby different types of standards to how CSR should be perceived as a capability are set. Formal institutions are formed by these ideological, political and cultural differences, which are not the least displayed by the resistance from the US to ratify the Kyoto protocol. The resistance to conform to one set of common principles on how CSR should be interpreted and executed shows a disparity between North American and European firms that is further enforced by the isomorphism (DiMaggio and Powell, 1983) within these regions which is instigated by further political aligning of regions (the EU and NAFTA) and thus the cross-cultural trading takes an additional downturn. This leads to the first proposition that states:
Proposition 1: The unique home regional institutional environments in North America and Europe will lead to different types of MNE CSR strategies in each region.
As CSR is recognized as performance enhancing (Porter and Van der Linde, 1995; Sharma, 2000; King and Lenox, 2002; Ambec and Lanoie, 2008; Porter and Kramer, 2006) it can also be exploited as a capability to develop a firm-specific advantage. International expansion is dependent on the firm’s ability to transfer capabilities successfully. Certain FSAs are less transferable than others and, for instance, being ahead of domestic competition in a particular field does not instinctively translate to the same advantage abroad. Advantages can be exclusively embodied in the firm and thus too complex to transfer (Hu, 1995). As firms’ CSR programs are developed they are inherently more or less defined by the firm’s own perception of how it can leverage their business (Kourula and Halme 2008; Porter and Kramer, 2006). Hence, to summarize, expanding internationally can lead to issues with loss of advantages, advantages being counterproductive because of discrimination, or lack of supplementing investments (Cuervo-Cazurra et al, 2007; Johanson and Vahlne, 1977; Rugman and Verbeke, 1992). The vulnerability to internationalization is further on to a large extent dependent on the specificity of the asset (Riordan and Williamson, 1983; Williamson, 1983; Dyer, 1996; Rugman; 2005). As strong specificity of assets limits the deployness of them it can have a negative effect on the transferability of the FSA. CSR as an FSA is due to its inherent linkage to the CSAs highly site specific as an asset and thus bound to be difficult to transfer. Hence, as CSR-programs are mainly asset-specific, from a site specificity point of view, they are inherently FSAs with low levels of global reach. This translates to the second proposition:
Proposition 2: Site specificity of CSR-programs does not allow CSR to be utilized as a transferable FSA.
The LoF that needs to be overcome by firms attempting international expansion is not strictly homogenous. The LoF that affects firms are dependent on the pattern of internationalization as to whether the host country is located within the home region or outside (Goerzen and Beamish, 2003). As described above, the LoF derives from ventures in new environments that subjects the firm to unfamiliar culture, administration, language and institutions. However, the degree of unfamiliarity differs
depending on if its intra or inter-regional expansion (Rugman and Verbeke, 2007; Whitley, 1992). Venturing outside the home region subjects firms’ to an expansion where location bound and non-location bound FSAs cannot be tuned to be as effective and efficient as within the home region. Inter-regionality also impact FSAs derived from different part of the value chain differently. FSAs that stem from the downstream part of the value chain are more exposed to inter-regional LoF (Rugman and Verbeke (2004; 2007). Whereas FSAs derived from the upstream part of the value chain of the business can hedge against the LoF through risk sharing with partners in the host region, FSAs from the downstream part is more exposed. This is due to the nature of how upstream related FSAs are not as related to market seeking as downstream related FSAs, which is more vulnerable to LoF (Rugman and Verbeke (2004; 2007). In the light of these arguments CSR FSAs that are anchored in the downstream part of the value chain is less transferable inter-regionally than upstream anchored CSR FSAs. This leads to the third proposition:
Proposition 3: CSR-programs that are associated with the downstream parts of the retail firm’s business are more vulnerable to inter-regional LoF and thus the CSR FSA is less transferable inter-regionally.
Whereas specific parts of firms’ operations’ are affected by its allocation in the value chain an entire industry’s allocation in the value chain is also of importance. Previous studies (Rugman and Girod, 2003; Rugman and Collison, 2004; Rugman, 2005; Filippaios and Rama, 2008) show how different sectors are variously inter-regional, and constrained by different types of boundaries, depending on their industry specificity. CSR is, depending on the industry specificity, to different degrees influenced by climate change and social issues and thus afflicted by it. The extent of the threat, the possibilities to exploit advantageous opportunities, the level of globalization of the firm and the political leverage of the industry are factors that influence how firms’ develop their CSR-programs (Kolk and Pinkse, 2011). The retail industry is positioned at the customer-end of the supply chain and is thus keen to communicate to their customers about their commitment to CSR. Strong environmental performance is an industry standard and is considered as performance enhancing alongside with low prices and delivery (Strong, 1995) and when the price and quality of products is considered to be equal customer tend to favour the socially
and environmentally responsible company’s offer (Bronn and Vrioni, 2001). Further, Girod and Michael (2003) argue that within the retail sector CSR is a key tool for creating and developing the brand. While Kolk and Pinkse (2011) argue that CSR mainly is practiced by industries that are in the upstream part of the value chain and thereby heavily impacted by environmental and social issues, the retail sector’s positioning is close to end-users and thus at the downstream part of the value chain. This positioning signifies the importance of owning a strong branding asset that derives from CSR capabilities, which leads to the fourth proposition:
4. Retail firms’ CSR is utilized as a brand strengthening capability, which is industry-specific.
3. Methodology
This study was conducted by using a qualitative multiple-case study. The basic foundation of the theme of this study was derived from the seminal work of Rugman (2001) on the concept of regionalization, and the works of Kolk et al’s (2013), which studied regionalization strategies of EU electric utilities, from which this paper adopted the most of the methodology.
3.1 Research Philosophy
The concept of ontology explains the nature of existence and reality. According to Saunders et al (2007) the ontological stance is crucial as to how the researcher assumes and carries particular views in the context we operate in. The ontological position can be either objective or subjective. The objective position believes that a social reality, empirically, can be explicitly objective in opposite to the subjective position that assumes reality is altered by the investigator in the way the research is interpreted and described. This research applied a subjective view as this research was influenced by assumptions that the authors view is not entirely objective due of limitations of time and data.
The epistemological view frames how the research will gain validity and reliability and it offers different types of perspectives (Sanders et al, 2007). This paper used a post-positivistic stance that aimed to question the realism and not accept results and findings as absolute truth but as more probable facts, in opposite to positivism (Myers, 2007). As this study sought to explain a phenomenon with a limited and narrow scope, based on relevant and current findings that the author has chosen, the research is to some extent biased and consequently not completely objective.
3.2 Multiple-Case Study
Based on the framework of designing a case study by Yin (2003), a multiple-case study was used to analyse the cases thoroughly within the selected context. The cases represent real life phenomenona rather than arguments or specific topics. A qualitative case study explores the underlying concepts of the cases and the relationships between them. By using a multiple-case method each case acts as a unit of experiment, which makes it possible to replicate the data. Thus, it possible to build
or refine the theory that may not be testable, but suitable to illustrate relationships and tendencies robustly (Eisenhardt & Graebner 2007). While the use of a quantitative research method seeks to generalize the qualitative study instead takes a closer look at particular cases. The qualitative study provides a conclusion that is appropriate for the specifics of the cases and thus allows the author to study issues more in-depth. Hence, the study aimed to expand the applied theories instead of searching for numerical values such as frequency or probability (Hyde, 2000). Further on, a multiple-case study can combine qualitative and quantitative data that can overlap each other and allow additional perspectives and the opportunity to strengthen the theory by triangulation. It further allows a flexible sampling of evidence that enables the result to become more comprehensive and multifaceted (Eisenhardt, 1989). As this paper aimed to provide an explanatory answers to how the CSR profile of retail companies is influenced by regionalization the multiple-case study was fitting, as it provided the opportunity to gain insight in a not previously researched subject within a natural real-world context.
3.3 Focal Sector and Case Selection
Previous studies showed that the retail industry has been a mainly home-region oriented sector (Rugman and Girod, 2003), but there are still many retail firms’ that attempt to expand beyond the home region. This made the focal sector of this thesis interesting from a longitudinal regionalization point of view. The retail firms’ internationalization patterns are also interesting with regards to the how they perceive liability of foreignness (Zaheer, 1995) and discrimination (Asmussen, 2008). The sector also contained leading firms’ of the industry that are present in two regions, North America and Europe. This made it feasible to demonstrate the affects of political, economical and cultural alignment within these regions. The retail industry is scattered into different types of categories with regards to what type of products they are retailing and in what storehouse format. To be able to make a comparison that was as analogous as possible the selected firms was chosen from the largest group of retailers, namely retailers mainly running discount stores and superstores. The sample was made out of six retail firms, three European and three American and they were the following: Walmart (US), Kroger (US), Target (US), Tesco (UK), Metro Group (DE) and Royal Ahold (NL). The selection of these specific firms was
based on the availability of data in the form of total and regional sales, assets and employees as well as the availability of CSR reports.
3.4 Data Collection
The study limited the scope of research to five years, starting with data from 2008 up to 2012. Setting up the study longitudinal enabled the possibility to spot trends and movements within or between the firms. The data was collected from the annual reports of the firms and in the absence of data from these sources other official documents emitted where used such as financial reports and financial statements. The sample consists of three firms from two different regions in an attempt to investigate whether there was an interesting and narrative difference between the regions’. The North American region consists of three US based firms, as all of the region’s largest retail firms are American. The European firms are comprised by the three largest firms in the European region that also fulfils the criteria of having available data for the entire time period. Whereas the collected hard data provided understanding of how the firms’ regional orientation is dispersed or concentrated, historical news sources are also explored to add more depth to the story the thesis is narrating. News articles from the Financial Times have been collected for the entire time period, which has then be screened and subsequently analysed to draw conclusion of the firms strategic decision derived from key events.
The firm-level data collected was mainly retrieved from annual reports and CSR reports that could be found at the respective homepages of the firms’. The data was then scanned manually by searching for specific keywords, such as synonyms and leading words, that could assist finding the annual sales, assets, employees and the CSR profile separated into geographical segments. This proved to be difficult as many firms choose to report their data in segments of specific countries’ of interest, leaving out other less important data or bundling continents together with each other or simply not presenting it at all. Regarding one of the focal firms’, Walmart, sales, assets and employees was not segmented at all and instead estimation was used based on the relative amount of stores globally, which is analogue to Rugman’s (2005) methodology. Articles collected from Financial Times where collected through the computer-assisted software LexisNexis where the names of the firms where the basis of search. Regarding the search for articles for the US firm Target the index term “retail” was used as a filter as a search without the indexing would result in only
irrelevant hits. The result of the search resulted in 1277 articles for Walmart, 110 for Kroger, 70 for target, 3000 for Tesco, 130 for Royal Ahold and 90 for Metro AG. The result is very imbalanced, as Walmart and Tesco appear to attract more business new exposure. This will entail that Walmart and Tesco is slightly overrepresented. The examination of the firm-specific information is then utilized in the same way as Maguire and Hardy (2009) and Kolk et al (2013).
3.5 Analytical Approach
The cases’ were analysed by implementing a within-case analysis for each and on of the firms and a synthesized cross-case analysis. By analysing using both methods the similarities and dissimilarities between the firms can be distinguished, but also the general observation of the firms’. The CSR profile of the firms’ are analyzed according to TBL-approach (Elkington, 1997) and in line with the study conducted by Jamali and Mirzhak (2007). Jamali and Mirzhak (2007) used a conceptualization where corporate social performance was differentiated between the different types of responsibilities. By applying this method each component of CSR is separately analysed and aggregated represent the entire CSR-profile of the firm. The method also allows examine the actual outcomes of the responsibilities by investigating CSR-specific programs (Wood, 1991). This paper analysed the CSRs derived from the four propositions, which specifically investigated CSR from the perspective of the site specificity, downstream and upstream allocation, brand strengthening capability and the unique home regional environment. Thus, the paper is set out to examine the CSR-motivations of the firms’ and track how they were implemented and harnessed.
Thematic coding utilized through CAQDAS aided the analysis of the articles and CSR reports. To be able to organize the data efficiently and thoroughly the reports and articles were coded according to specific labels that concerned the propositions’. An inductive approach was applied as codes were chosen based on what the reports and articles suggested. Analysing the data information inherently proposed codes where answers could be derived from. The codes were assigned to one of the specific working proposition to maintain a coherent and relevant coding process. Patterns and deviations of themes emerged through the use queries, such as word frequency, which quickly presented a good representation of the most common and less common phrases and words.
4. Results
The result section firstly consists of within-case tables (Tables 2-7) representing each and one of the six firms’ in this study and contains internationalization data for sales, assets and employees for the years between 2008 and 2012. The tables also provide a generalizing summary of the CSR profiles’ of the firms providing a broad view and an overall judgement based on three of the propositions proposed (2-4). The information collected to assess the CSR profiles’ is mainly found in the annual CSR reports, but also from the articles from Financial Times. Secondly, all of the within-case tables are followed by a more analytical text passage, which also provides in depth context and details to the results of the tables’. The cross-case section is also represented by a table (Table 8), which is synthesized version of the information from the within-case section and followed by a text passage that examines all four of the propositions’. All tables in the result section is referenced through footnotes whereas the ensuing text passages, given the large number of sources from the annual CSR reports and articles, do not provide detailed references. Full referencing is available upon the author’s request.
4.2.1 Royal Ahold
